RAMALLAH, West Bank (AP) — U.N. Secretary-General Ban-Ki moon said Thursday that he is “deeply troubled” by Israeli settlement building and that it could ultimately prevent the establishment of a Palestinian state.

A day earlier, Israelis and Palestinians had launched formal talks on the terms of a Palestinian state, ending a five-year freeze. The talks were overshadowed by recent Israeli announcements on promoting plans for more than 3,000 new settlement apartments.

The Palestinians want a state in the West Bank, Gaza and east Jerusalem, captured by Israel in 1967. Israel has built dozens of settlements there that are now home to more than half a million Israelis and are deemed illegal by most of the international community.

“I am deeply troubled by Israel’s continuing settlement activity in the West Bank, including east Jerusalem,” Ban said, speaking at a news conference with Palestinian President Mahmoud Abbas. “The settlement activity is deepening the Palestinian people’s mistrust in the seriousness on the Israeli side toward achieving peace. It will ultimately render a two-state solution impossible.”

The five-year break in Israeli-Palestinian negotiations was largely due to a dispute over settlements. Abbas insisted on a settlement freeze as a condition for talks. Israeli Prime Minister Benjamin Netanyahu rejected the demand, arguing that all issues should be raised in negotiations with the Palestinians.

Under U.S. pressure, Abbas eventually agreed to return to talks without a settlement freeze, though Abbas aides have said the Obama administration assured them it would try to restrain Israeli construction. Amid expectations of a slowdown, Israel’s recent announcements about new settlement plans prompted particular anger among Palestinian negotiators. Israeli officials argued that much of the new construction is planned in areas Israel expects to keep in any peace deal.

The current round of negotiations is the third attempt since 2000 to set up a Palestinian state alongside Israel. Negotiators are to draw borders, including one running through Jerusalem, agree on security arrangements and decide on the fate of millions of Palestinian refugees and their descendants.

The U.S. hopes Israelis and Palestinians can reach a deal within nine months, though expectations on all sides are low.

Abbas said all key issues were addressed in Wednesday’s round, adding that “we can’t say that we have achieved or not achieved progress because we are still at the beginning.”